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FHA Loan Volume Falls as Claims Rise

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Last month, the seasonally adjusted annual rate for FHA loan applications fell to an estimated 1,450,900, the lowest January since 2007, according to the FHA Single-Family Outlook released this week.

The agency blamed severe storms throughout the country for part of the lull in applications – higher mortgage rates were probably to blame for the rest of the shortfall.

During the month, a total of 103,991 single family loan applications were received, including 55,417 for home purchases, 41,178 to refinance, and 7,396 reverse mortgages.

The total was down 7.6 percent compared to December and 17.5 percent lower than a year earlier.

Meanwhile 119,521 mortgages were endorsed during the month, including 63,887 purchase money mortgages, 49,167 refinances, and 6,464 reverse mortgages.

Endorsements were down 10.5 percent from a month earlier and 24.6 percent lower than a year ago.

At the same time, loan servicers reported to the FHA that 612,443 mortgages were in a serious default, yielding a default rate of 8.9 percent.

That was up slightly from 8.8 percent a month earlier, but down from 9.2 percent last year.

However, the FHA has already paid out 115,272 claims so far this fiscal year, 48 percent more than the 77,887 paid out during the same time last year.

Most of these claims were loss mitigation payments and a number of others were pre-foreclosures.

So far this fiscal year, the FHA has received 182 applications for its short refinance program and 363 applications for the Hope for Homeowners program, insuring 40 and 93, respectively.

Just 12 Hope for Homeowners applications were endorsed in fiscal year 2010 – Congress originally made available $300 billion for these types of loans, anticipating as many as 400,000 families would benefit from the loan program.

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